Q: I am looking at investing in Vanguard Admiral funds for their low expenses. I only have around $25,000 in investments, and the minimum for these funds is $10,000. Would it be better to invest in 2 asset classes of the Admiral funds (to keep expenses down), or invest in the 9 asset class funds that you recommend with a $3,000 minimum (in order to be more diversified)?
A: There are two possible solutions. One is to purchase the investor shares with the $3000 minimum purchase. That means you will be paying about .1% more in expenses but pick up asset classes that should more than make up for the difference in return. The second is to use the commission-free ETFs where the expenses are similar to the Admiral shares. You will pay a slight premium to access the ETFs but that should be easily made up by the lower fees. When you have enough in the ETFs to reach the Admiral shares, Vanguard allows a cost-free exchange to the Admiral shares.